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Fixed vs trailing stops


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Fixed vs trailing stops

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  #1 (permalink)
Singapore
 
Experience: Beginner
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Posts: 25 since Jun 2017
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This is the continuation thread where we further discuss about the pros and cons of fixed stop vs trailing stop.

I have gathered some bsck test data, it seems that fixed stop may get you more profit but its challenging to watch your trade go against you without doing anything when you had the advantage

For trailing stop, profit may tend to be lesser due to being stop out but you do capture a fraction of profit. But the challenge is usually price is going in your favor but you are stopped out too early.

The above is even more complicated when you are trading only with 1 lot.

Well how do you guys manage your trade? Feel free to share



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  #2 (permalink)
New Zealand Welly
 
 
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I like fixed

feels like a clean poop where you don't have to wipe, just in or out. Flush and on to the next trade

trailing is like this drawn out breakup, where you still go back there for sex. And even when you're fully broken up you still find a way to get back in at a later point because there's so much there and you haven't lost that much and end up back at square one.

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  #3 (permalink)
Toronto Canada
 
 
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eilanzier View Post
This is the continuation thread where we further discuss about the pros and cons of fixed stop vs trailing stop.

I have gathered some bsck test data, it seems that fixed stop may get you more profit but its challenging to watch your trade go against you without doing anything when you had the advantage

For trailing stop, profit may tend to be lesser due to being stop out but you do capture a fraction of profit. But the challenge is usually price is going in your favor but you are stopped out too early.

The above is even more complicated when you are trading only with 1 lot.

Well how do you guys manage your trade? Feel free to share



Sent using the futures.io mobile app

It's a challenging and frustrating subject! I've been trying to understand what's best for a very long time, through backtesting and live trading.

Bottom line is what I've determined works best for me is to scale in/out frequently. I know you said you may only trade 1 lots and to me that's where the biggest problem is. Since the introduction of index micro contracts I've been able to adapt my trading to support scaling out on a much more regular basis. I grew tired of trying to figure out what exactly is best. I grew tired of second guessing myself on whether or not to hold a trade to my algos recommended targets. I've tried fire and forget type orders with attached stop and target and was never happy with the results. The only thing that has made the problem easier to deal with is to take partial exists imo.

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  #4 (permalink)
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eilanzier View Post
This is the continuation thread where we further discuss about the pros and cons of fixed stop vs trailing stop.

I have gathered some bsck test data, it seems that fixed stop may get you more profit but its challenging to watch your trade go against you without doing anything when you had the advantage

For trailing stop, profit may tend to be lesser due to being stop out but you do capture a fraction of profit. But the challenge is usually price is going in your favor but you are stopped out too early.

The above is even more complicated when you are trading only with 1 lot.

Well how do you guys manage your trade? Feel free to share



Sent using the futures.io mobile app

In General...Stops can be managed better in a trending strategy. They usually screw up a mean reverting strategy.

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  #5 (permalink)
Singapore
 
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Posts: 25 since Jun 2017
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Well generally for myself

1. I find it hard to accept the fact that I could have exit at some profit meaning if pricr goes in my favor for 80 ticks, I could have earn atleast 20 if I shifted. But end up losing to trade

2. I do not agree with using stop loss as break even too soon.


I gonna try to do scaling in and out but not too sure about the concept of it.

I personally trades NQ but recently account was damaged hence went down to micro NQ to recollect myself.

What do you guys trade?

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  #6 (permalink)
Singapore
 
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Mind sharing your concept of scaling in and out?
RT777 View Post
It's a challenging and frustrating subject! I've been trying to understand what's best for a very long time, through backtesting and live trading.

Bottom line is what I've determined works best for me is to scale in/out frequently. I know you said you may only trade 1 lots and to me that's where the biggest problem is. Since the introduction of index micro contracts I've been able to adapt my trading to support scaling out on a much more regular basis. I grew tired of trying to figure out what exactly is best. I grew tired of second guessing myself on whether or not to hold a trade to my algos recommended targets. I've tried fire and forget type orders with attached stop and target and was never happy with the results. The only thing that has made the problem easier to deal with is to take partial exists imo.

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  #7 (permalink)
Singapore
 
Experience: Beginner
Platform: ThinkorSwim
Trading: Crude CL, Gold GC
 
Posts: 25 since Jun 2017
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This make sense, I am trying to adapt to fixed. Not easy though
timo123 View Post
I like fixed

feels like a clean poop where you don't have to wipe, just in or out. Flush and on to the next trade

trailing is like this drawn out breakup, where you still go back there for sex. And even when you're fully broken up you still find a way to get back in at a later point because there's so much there and you haven't lost that much and end up back at square one.

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Visit my futures io Trade Journal Reply With Quote
 
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  #8 (permalink)
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Broker: TD Ameritrade, Phillips Capital
Trading: ES, NQ, Equities
 
Posts: 2 since Mar 2020
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eilanzier View Post
This is the continuation thread where we further discuss about the pros and cons of fixed stop vs trailing stop.

I have gathered some bsck test data, it seems that fixed stop may get you more profit but its challenging to watch your trade go against you without doing anything when you had the advantage

For trailing stop, profit may tend to be lesser due to being stop out but you do capture a fraction of profit. But the challenge is usually price is going in your favor but you are stopped out too early.

The above is even more complicated when you are trading only with 1 lot.

Well how do you guys manage your trade? Feel free to share



Sent using the futures.io mobile app


There was a time where I too, tried to figure out the best stop to use, without either leaving money on the table using a trail, or watching fixed stops get hit. So, I came up with a hybrid. Of course, this is my own weird way to do this, but it works great for my trading style.

I use preprogrammed ATM strategies (Automated Trade Management) which is the equivalent of an OCO order, or bracket orders to manage my stops.

Hypothetically. Letís say I am trading the NQ and place a trade looking to make 40 pts. This is how it would play out:

40 Profit Target

20 Point Stop loss

Once the trade is positive 10 pts, the ATM brings the stop up from 20 pts to just 10 pts from where I bought it. Once the trade reaches +20 pts, it brings my stop to break even. Now, hereís where itís more tailored. If it reaches 30 pts, my stop climbs to +20, and if it reaches 38 pts, my stop moves to +35 pts. And if it doesnít make it to my 40 pt target from 38, I walk away with +35 pts.

This is just an example, but what I am doing is giving it more room at the beginning of the trade so that I donít get stopped out, but then I create tighter thresholds, while still giving it ďsomeĒ room to breathe when the trade is positive, until it gets closer to my target where the stop gets tighter.

It is very important to note that you must know your trading instrument and how much it moves and pulls back so that you can properly space out the stops. This takes a little bit of tuning. Nothing is perfect, neither trail or fixed, but since I have customed tailored my stops, I have been very happy with the results.

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  #9 (permalink)
New Zealand Welly
 
 
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if you think the stock has the potential to really run, out of the money long gamma can be life changing and pre-covid priced well below its risk....

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  #10 (permalink)
Toronto Canada
 
 
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eilanzier View Post
Mind sharing your concept of scaling in and out?

I've actually gone down this path quite far. I took my basic algo that worked on one time frame and adapted it to multi-intraday timeframe support. So now what I do is leave my base chart on 5 min candles but I plot the results (entries, stops, exits) of at least 5 different tf's on it. Sometimes I only have 1 signal, sometimes all 5. Sometimes they come in clusters and sometimes they are very spread apart. Since I'm discretionary I look for clusters of lines. In the past I only had 1 number, now I may have a range of say 10pts on NQ. If my max number of micros is 10, then I'll attempt to scale in within that range. At the same time, the algo will give me a different exit and stop for each of those timeframes. This is where I'll set my tp's to scale out.

Even if you don't have multi tf support or your system doesn't fit the description, I think you could still do partial exits based on other factors and I think in the long run it becomes less stressful than watching that great trade turn negative after 'almost' hitting your target. Slow and steady wins the race imo and trading singles makes each trade very 'binary'. A smoother PnL can be achieved with some method of scaling.

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